Bishop Hill Shell shuns shale
May 3, 2013 Energy: gas The Telegraph is reporting that Shell will shun UK shale gas development:
Simon Henry, Shell’s chief financial officer, said it had already allocated more than $6bn (£3.8bn) to shale globally and was not going to exceed that sum.
“We have a successful and growing business in North America, we have great opportunities in China, Ukraine and Russia,” he said. “The UK has to compete directly with them and right now nobody even knows whether the gas will flow.”
“Do we want to be first in and be in the headlines every day in the UK? Well, your answer is: we are not,” he said.
We appear to find ourselves in something of a Catch 22 situation. Nobody will invest in the new generating capacity that the government wants because nobody believes that the government policy of institutionalised insanity will last - taxpayers will not bear the kind of price rises that Davey wants to impose on everyone. But while the government is insisting that insanity is the way forward, nobody is going to invest in the UK energy industry at all.
Reader Comments (49)
So yes, in the long run, the warming crowd's policy will be a complete and utter disaster, and will be exposed as such.
Unfortunately, in the short run, it will work. The UK will be effectively closed to shale development. And that is what they want. It will set us back five years, probably, as nobody will invest in such a difficult environment. This will please the warming crowd as they'll be able to point at it and say, “Look, shale isn't even commercially viable. Nobody wants to do it" conveniently ignoring the rest of the world where it's progressing gangbusters.
They'll obviously then have to explain why the rest of the world is getting richer and energy prices are dropping, but that's just reality. The warmist crowd have never really worried about that before.
Then, when the lights go out, prices skyrocket and we are looking for somebody to blame, the culprits will quietly disassociates themselves. We'll probably then be faced with the hypocritical sight of a future Labour Party going mad for shale gas and rebranding it as the saviour of Britain: the People's gas, or some such nonsense.
Clearly not impressed with the government intention to tax shale back up to match the cost of hot air.
Shell are probably trailing their coat for a few more tax breaks....but given the vicious nature of the shale debate in the UK you can hardly blame them for staying out of the game until the situation has crystallized.
Eventually we will be begging them to drill.
What an effing shambles.
Our juvenile government doesn't understand why it has to be trustworthy and why, government changes notwithstanding, policy has to be consistent over the long term. Inviting people to participate in a 40-50 year project, will only work if those invited are completely confident the rules won;t be changed halfway through the game. There are not many organisations capable of providing large scale energy infrastructure, but there are quite a lot of governments around the world who are potential customers. If I ran such an entity I'd feel a lot more confident committing my resources to a deal with, say, the government of Singapore, than HMG. People bemoan the loss of trust in our institutions, but its not hard to work out the reasons.
The UK has bought into new age global warming hook, line and sinker, yet the US subject to the same scientheology is now centuries ahead of the UK in terms of cheap reliable energy. So what gives?
The Royals positioning themselves to greenflece the public using their ownership of land estates & the seabed hasn't helped. Gorebull, ExcelPhil, Mannipulator and TamperHansen have a lot to answer for too, yet the generating industry in the UK fell for all this green energy crap while the US invested in shale gas.
Time to buy pot belly stoves and candles.
Local elections Green's obliterated.
Might be time to invest before anyone notices the wind's changed.
Britain has a great many companies involved in oil and gas production, not just the household names like BP but also many others providing specialised services. If the British government effectively discourages the exploitation of shale gas and oil in this country then that industry will be damaged just as so many other formerly great British industries have been damaged in the past. To take just one example, who would have thought in 1950 that most of the British shipbuilding industry would have gone within two generations?
All our remaining industries that are fairly energy intensive are, of course, already under threat. Do our politicians really think that their dreams of renewable energy will come true? Even if the engineering problems can be overcome does anyone believe that renewable energy (excluding hydroelectric schemes) can ever compete with conventional or nuclear sources in terms of reliability and price?
This Shale not pass!
Who have we got to thank for the apparent vice like grip that the eco loons seem to exercise on the political class? I think that the list is long and certainly includes Greenpeas, Fiends of the Earth, WWF, the EU and of course the unspeakable BBC. They oppose everything that's sensible and practical.
Cameron, in his lust for election victory in 2010, was certainly too easily convinced of the need to save the planet by committing economic suicide - a position that he will now find impossible to extricate himself from. Assuming that he even wants to!
The result is an energy policy that is so illogical that it beggars belief that anyone with reasonable common sense cannot see that we're heading for a catastrophic outcome unless we change course.
I seem to recall that Shell have form as supporters of the "low carbon economy" and made a lot of money out of it so this is no surprise. However, one thing they forget is that a lack of energy will destroy industry and who will buy the Shell products then.
Too much is being made of this.
Shell is not the only energy company in the world.
And that they have chosen not to compete in the UK shale market says nothing about what others may or may not do.
Shell have their own unique circumstances and history. Others have different ones and might make very different decisions.
At this point, it should all be about lead times to bring energy production online throughout the UK. Some predicted a couple of years ago that lead times for energy production, delivered to the user, is about 10 years, given the gauntlet of "reasons not". Supposing the 10 year lead time is mostly right, that would include this period of dithering over financing and government trust. The Time Machine, thusly, predicts the needed energy to begin coming online to the consumer around 2021 +/-.
The only possible benefit of all this nuttiness are the inventions the Brits will create since they, as a nation, are the greatest tinkerers and inventors in history. Who knows, maybe some will finally find the Philosophers Stone so they can buy what they need (electricity) from, say, France. Or Germany. Or...
That loud flushing sound isn't just the UK economy being rinsed away. Quite a few political careers are in the same toilet bowl, plus at least half a governmental department.
Unfortunately for the rest of us, along with carbon traders many of them will be realising that the end is in sight but see no advantage in going quietly.
lol. What is Chinese for "Take your EU airline carbon-tax, turn it sideways, and stick..."
Cameron wanting a reason why Ukip are so popular need look no further than his recent policies, lack of direction on Europe and the reliance on windmills for energy.
One little stated Ukip policy is to stop the wind generation in favour of conventional energy production. With local councilors in place new wind developments can be stopped. Gas may soon follow.
We live in interesting times.
I don't think the energy companies fell for the 'green energy crap'. They were forced to invest in renewables or face massive fines. The fact that they were given huge guaranteed profits (via ridiculous subsidies) ensured they would invest in renewables, regardless of their knowledge that renewables are useless. If the subsidies were cancelled today, we could get back to a sensible policy based on competition.
John Marshall. Local councillors cannot stop wind developments. As long as Government appointed Planning Inspectors are under instruction to allow all appeals, then nothing can be done to stop the developments. All that can be done is to delay approval.
Shell's position is not surprising. The majors often leave the front-running to smaller outfits which then "farm out" the plays if successful. As a by-product it keeps them out of the front line in the PR stakes if the greens were to stir up some sort of consumer backlash.
Also this does not have much consequence for our oil & gas companies. The N. Sea is facing a wave of investment with new finds and field extensions to the point where there are fears of skills shortages and escalating costs.
Behind the scenes we can only hope that the message is being hammered home to DECC et al to get their act together: no-one wants to invest in the current circumstances.
Recall that Lord who was from Shell's executive leadership and helped coverup climategate.
Shell is a typical imperialistic culture corporation: Perfectly willing to exploit resources abroad under one set of rules, and declining to exploit those resources at home. And even support causes at home antithetical to their work in the 'colonies'.
The hypocrisy and lying that the AGW/greens are engaging to at once support windmills and fight shale is breath taking. And doomed. Pielke's iron law is going to be demonstrated in the UK soon. AGW promoters are going to experience a pendulum swing that will leave them quite dizzy.
In the US the EPA waived its groundwater contamination protocols to allow fracking. The landowners hold the mineral rights so locals have an incentive to allow fracking since they benefit financially.
In the UK groundwater contamination limits are tight and mineral rights are owned by the government. All the locals get from fracking is the negatives, from traffic to pollution. This makes local opposition much stronger. To havest shale oil here on a large scale would require removing a lot of the existing planning controls, at the expense of the rights of those in areas threatened with its consequences.
Shell are wise to be cautious, since the UK's legal and political frameworks make it much harder to harvest shale gas profitably hre than elsewhere.
Of course, you could always elect UKIP and remove a lot of the protections for the individual which this site prides itself on defending.
I've never yet seen humans protected from the insidious effects of wind turbines. If you are a bat or a great-crested newt, then you are OK, but humans have to put up with their health and well-being damaged by useless wind turbines. The LibLabCon alliance cares not one jot about the health of people forced into living close to wind turbines.
Shouldn't the headline of this post be
"Shell Shuns (UK) Shale" ?
Stuck-Record:
Should Scotland achieve the independence that Alex Salmond so desperately craves, Labour would stand significantly less than a cat in hell’s chance of gaining government over the rump of the UK. Without UKIP, we could be facing decades of “Cast Iron” Dave’s policies.
Bear in mind that Shell and BP have invested vast amounts in ships and terminals for the import of LNG; it is understandable that they do not want it all to be entirely wasted.
Stupidity has its own built-in shelf life. We are coming to the end of this particularly brilliant display of stupidity brought to you by Blair Brown Milliband Cameron Clegg et al (although I dont really blame Al). Political risk is suddenly front and centre. Who'd a thunk it? Certainly not any of the above named bozos.
May 3, 2013 at 2:37 PM | Unregistered CommenterEntropic Man
"In the UK groundwater contamination limits are tight and mineral rights are owned by the government. "
=============================================
Most minerals are not owned by the state. British Geological Survey -
"With the exception of oil, gas, coal, gold and silver, the state does not own mineral rights in the UK."
http://www.bgs.ac.uk/mineralsuk/planning/legislation/mineralOwnership.html
(I'm fairly certain that the list should include uranium, but can't find the reference for it.)
This has to be a first.
Killing the goose, just in case it lays a golden egg. The ultimate abuse of the precautionary principle.
The LibLabCon alliance cares not one jot about the health of people forced into living close to wind turbines.
May 3, 2013 at 3:10 PM | Phillip Bratby
And would you impose the same on those near a shale gas operation?
it seems that entropic man is committed on charging back to the past as fast as possible.
- how about cheaper energy too? And maybe you could supply some data on the pollution? Are you aware of the Wytch Farm oil field? It seems to work in a very sensitive area (from Wiki):I suppose you would have been one of those people back in the 1800s protesting about the creation of coal mines - because all they bring is pollution and horrible working-class people into the area..
Or a few centuries before that, you would have been protesting that it is unnatural to build windmills...or some other similar bullshit.
And then back in the Bronze Age, you would have been protesting about the abandonment of our lovely cultural heritage of stone tools.
Entropic Man,
I certainly think local communities can, and should, benefit from shale gas. But it does not follow that net local inconvenience and environmental damage will necessarily occur. That is often simply the default assertion of people like Friends of the Earth and Greenpeace. It is hardly necessary to ask them their opinion, as it always seems to be the same.
For the record, my maternal grandparents are located right on top of the Bowland Shale, within spitting distance of three Cuadrilla sites in the Kirkham area of the Fylde . I can't ask them what they think, because they are now both six feet-under (I actually bear the names of the two local churches they attended).
Two weeks ago I attended the 50th birthday of my closest blood-relative living in the area (married, three children). He is currently one of the long-term unemployed, having been made redundant by British Aerospace. I didn't get the impression that he would mind a local hydrocarbon industry.
What do you expect when the loonies that we've got say that Shale has to be tied to carbon capture? Thank heavens for UKIP. Maybe that will shake the ideas at Westminster.
Entropicman any sane person would prefer to live near a shale gas operation them a windmill (sorry turbine).
Entropicman any sane person would prefer to live near a shale gas operation them a windmill (sorry turbine).
May 3, 2013 at 8:53 PM | Don Keiller
Are you sure. To properly exploit a shale gas play using 6-well platforms requires 18 months of drilling and 1800 road tanker movements per platform. Each platform covers 3 acres (about two football pitches). Platforms are placed in a grid, spaced 1 mile apart in all directions across the landscape. Road tankers will remove the gas once the well-heads are established. Every 5 years each platform will need re-fracking.
Here's one sample calculation of the road transport needs for a drill pad. Remember that a fully exploited shale play will have about one drill pad per square mile.
http://www.bctwa.org/Frk-HowManyTankerTrucks.pdf
entropic man....did you read the wiki article about Wytch Farm?
You obsess about tanker movements. Pipelines could be built. Do you ever stop to consider alternatives in your peculiarly blinkered mind?
US Shale:
It started in Texas where the state, not the feds, owns the underground resources. It took off despite the EPA and the Department of Energy attempts to convert it to a slow grind. Western States, where the feds control up to 60% of resources, are rightfully angry at the lack of drilling permits while Obama boasts of American Enterprise and takes the credit for the boost to the economy from this remarkable resource.
metro
30 trucks a day EM? Any idea what typical traffic flows are for each class of uk road? Any idea what a typical supermarket receives each day? Or how many buses an hour people like to would like to receive?
Once again EM is behind the times. .The times taken to drill a well nowadays is a lot shorter than he quoted. Nowadays, many take less than 25 days. Also with the long throws now being achieved, they are often drilled off the one pad. http://www.eia.gov/todayinenergy/detail.cfm?id=7910 That takes truck movements down an order of magnitude.
If EM can't get even simple things like this right, how much credibility can we put in anything else he writes?
Entropic man is facing the ultimate entropy: reality overwhelming AGW fanatic's hype.
It is a sad day.
Frakking brings great jobs, from engineers to laborers, to truck drivers.
It brings a wonderful, dependable source of energy to the market.
The visual footprint of a 100 frakking wells is vastly better than the visual footprint of 100 windmills.
Gas well bring power that people can depend without operating subsides and produces royalties to the royalty owner. Windmills require operating subsidies, produce undependable power and produce profits at the expense of rate payers.
Windmill pushers are trying to rig the system to make gas as costly as windmill power, and charge the expense to the consumers.
The iron law suggests that those who have been pushing this sort of idiocratic policy will pay a huge political price, and soon.
The recent elections suggest that "soon" means "already starting".
The CO2 obsessed never had science or truth on their side. They only had domination of the public square and political power.
Both the public square and political power are fickle. Especially when based on apocalyptic claptrap.
ChrisM
Your link raises several points. Drill pads are not single well sites. Each pad may have six, sometimes up to twenty wells. At 22 days per well a six well pad would be drilling for four months and a twenty well pad for 14 months.
Regarding tanker traffic. A local goldmine in Tyrone sold tailings as landfill for a dual carriageway. The country road carrying the lorries from the quarry carried a similar load to one supplying a drill pad, some 30 loads per day, and had to be relaid twice in six months. You are not talking about main roads here, you are talking about minor roads designed for light traffic and the odd milk tanker; barely wide enough for two cars to pass.
In Fermanagh a typical pasture is half-drained peat bog. How do you build roads fit to carry a mobile rig when your hardcore disappers below the surface in a few weeks? Even in typical English rural environments building the rig roads described is going to cause major problems.
How is an average rural council going to react to planning applications for a drill pad per square mile or the 110 miles of rough road per 100 square miles of shale play? The procedures involved would be prolonged, contentious and politically difficult.
I dont know where you are getting your data, but you and others here vastly underestimate the difficulty and cost of large scale shale gas harvesting in the UK.
Entropic Man
I dont know where you are getting your data, but you and others here vastly underestimate the difficulty and cost of large scale shale gas harvesting in the UK.
Just what is it about private investment that you don't understand? A private company with private investors will risk its own capital in a venture that, should it fail, will cost you nothing.
Aerial photo of Wytch Farm enclosed.
http://www.vaguelyinteresting.co.uk/?p=266
bh3x2
Distinguish between different types of private investment. A drilling company makes its money drilling under contract to gas sellers. It has an interest in playing up the profitability of shale gas so it gets finance from investors to drill and frack. If the subsequent gas sales are insufficient to cover the drilling cost and the gas seller goes broke, it does not matter to the driller, who has already made his profit.
At present all the hype is coming from the drilling companies. Those who actually have to make a profit from the sale of shale gas have a much more cautious approach. Shell, for example, both drill and sell. They are drilling in counrties where they know it is easy and cheap to operate. They are avoiding the UK, where they know operations would be difficult and expensive.
Note that the parliamentary committee which studied shale gas was also cautious.
http://www.publications.parliament.uk/pa/cm201213/cmselect/cmenergy/785/785.pdf
the entropic dash for the palaeolithic age is still in full-swing:
If you knew anything about the oil and gas industry you would know that Shell never finds oil/gas and that BP never sells oil/gas.
At this point in the cycle, Shell is avoiding places where stupid policies, approved by morons, mean that it is hard to derive a return. This does not mean that it would be hard to make money from shale gas if the loonies did not run the asylum. But since loonies do run the asylum at the moment, you can rest safely in your strait-jacket, entropic man. And do you know about Wytch Farm? You have not replied so far.
EM
You are desparate if you have to quote the committee headed by the fossil fuels friend, Mr Yeo. I note that they didn't talk to any drillers, only a few CEOs of oil industries and a whole lot of NGOs and academics. All experts in drilling, of course. And you know jackshit about drilling. if they can successfully drill in the bottomless swamps of PNG, a few peat bogs aren't a problem. Also with the long throws achieved nowadays, they have a lot of freedom with their sites.
I would much prefer a drilling rig for a few months in the neighbourhood than a wind turbine for twenty years. We actually had a rig about a kilometre away from my place for several months drilling geothermal wells. It could hardly be heard above the traffic noise, even late at night. And the hydraulic pumps for fraccing aren't noisy either.
I'm familiar with Wytch Farm. Your are comparing a localised small scale operation for oil with a shale gas production system distributed over thousands of square miles. That is not a valid analogy.
ChrisM
Look at page 70-80 of the parliamentary committee report. You will find a long discussion with Francis Egan, CEO of Cuadrilla.
EM
My comments were in regard to putting in well pads. The committees' questions put to the men from Shell and Cuadrilla seem to be on tax, regulations and R&D. There are a few on replacing coal with gas but no followup when the answers aren't what the committee wanted. If you actually read the questions put to Mr Egan (who is from a drilling background), which one is about putting wellpads in peat country? And why did you talk about peat bogs in Northern Ireland when Mr Egan discussed Lanashire? If you are that concerned about the integrity of the bogs, I take it you are out there leading the protests on the windfarms on the moors which are a lot more destructive. I note that your previous comment that "All the locals get from fracking is the negatives" is contradicted by the answers to Q106 and 107. But you know better of course.
ChrisM
I keep returning to Fermanagh because it is my home ground and I've watching the progress of planning applications for exploratory drilling in western Ulster. This has been under way since 2010 and has generated a lot of local opposition. The Northern Ireland Environment Minister is delaying a final decision pending further investigation.
http://www.belfasttelegraph.co.uk/business/business-news/fracking-and-the-company-thats-exploring-the-depths-of-fermanagh-28728118.html
As you'd expect, there's lots of activity pro and anti.
http://www.frackaware.com/wordpress/
http://www.impartialreporter.com/news/roundup/articles/2013/05/02/400802-shale-gas-would-bolster-council-coffers-says-commons-report/
http://www.tamboran.com/wp-content/uploads/2011/09/Tamboran-NI-Update-Jan-11-2012.pdf
Note also that even if their activities are approved, Tamboran expect no commercial gas production before 2019.
On the "Shell Shuns Shale" post here at the start of May, Entropic Man was most insistent that Wytch Farm presented no similarities whatsoever with a shale gas operation.